Iran to break from Western bonds with Russia's help

16.01.2014

The United States expressed concern about the negotiations between Russia and Iran on a barter transaction for Iranian oil and Russian goods for the astronomical sum of $1.5 billion per month. For nearly two decades the United States has been pursuing a policy of economic strangulation of Iran. This would end if the said agreement is signed.

On Saturday, January 11, Head of Public Relations of the Ministry of Petroleum of Iran Akbar Nematollahi denied media reports on this deal, however, the Americans still expressed their "concern" on January 14. This suggests that they have reasons for this concern. What are they?

This transaction would significantly increase oil exports to Iran that fell by more than half due to the UN sanctions imposed by the United States and supported by Russia during the presidency of Dmitry Medvedev. Caitlin Hayden, a spokeswoman for the White House National Security Council, said that if these reports were true, such a transaction would cause serious concern for the U.S. because it would contradict the terms of the agreement with Iran and could potentially cause U.S. sanctions. Washington fears are understandable. In the event of the conclusion of such an agreement with Moscow Tehran may relax to some extent and not fear new sanctions of the West. Iran's foreign minister said in response that his country expected this reaction from the United States. Mohammad Javad Zarif said that the West seriously lacked confidence in Iran. He added that the Iranian people believed that their peaceful nuclear program was reviewed in a quite unreasonable manner. The Iranian nation was subjected to various kinds of pressures contrary to the international law, Reuters reported.

"Iran nationalized oil and gas companies in 1951, immediately after Prime Minister Mohammed Mossadegh was overthrown in a conspiracy organized by the British with the active participation of U.S. intelligence," told Pravda.Ru Azhdar Kurtov, a historian, political scientist and editor in chief of the journal Issues of National Strategy. "The United States for nearly two decades has been consistently pursuing a policy of economic strangulation of Iran. Since the main product that ensures its economic independence is oil, Washington has been trying to limit its export opportunities in every way. In the 1990s the Americans have adopted the D'Amato amendment prohibiting the U.S. companies investment in Iran's oil and gas industry when they reached a certain size. The Americans subsequently tried to make this law international, that is, to have all countries, including Russia, join its implementation. They managed to do it for most European countries. Due to the fact that the Iranian oil is of very high quality and Iran had stable trade channels, including in Asian countries, it proved impossible to completely strangle Iran economically," said the expert.

Azhdar Kurtov believes that in today's easing of sanctions Washington wants this economic stranglehold maintained and does not want Russia to lead negotiations on the Iranian oil as an independent subject of international relations. However, experts doubt that this agreement would be signed as the economic feasibility for the Russian Federation is not very obvious. "Russia is the largest oil power. It is impractical for Russia to buy Iranian oil, even in exchange for goods, even in exchange for hard currency. In addition, the refineries in the south of Russia are loaded, and change of the provider would mean a change of the technological process and making investments because oil is different," said Azhdar Kurtov. But there is another option. The consumer of Iranian oil is not Russia, and the transaction will be carried out according to a swap scheme (note that this is what the agreement is called in the West). "Oil is bought and then sold on the external market. It will not even go through the territory of Russia, it will go through the usual for Iran routes but will be considered Russian. This is the most likely option for the contract," said Azhdar Kurtov.

Feasibility can be found with other motivation as well. If Russia wants to sell Iran something very beneficial, then it will stick to any scheme. "This is very profitable, especially when it comes to products with high added value. In addition, such volumes would keep Russian enterprises busy with orders and pay wages," he concluded.

The issue of a barter transaction, as well as systems for S- 300 is likely to be resolved during the visit to Moscow of Foreign Minister of Iran Mohammad Javad Zarif on January 16. "We had a meeting with Iran's ambassador to Russia, and he held talks about the (delivery) of S-300 system," Fars agency quoted Kosari Ismail, head of the parliamentary defense committee.

Six mediators (Russia, United Kingdom, Germany, China, the U.S. and France) and Iran agreed on November 24 in Geneva that over the next six months Tehran would freeze its nuclear program. This step made ​​it possible for the Western "six" to ease the sanctions against Iran (to unfreeze the assets of eight billion dollars). The reached agreement stipulated Tehran's right to a peaceful nuclear program. At the same time the IAEA has considerably expanded its inspections of Iranian nuclear facilities.